* Working Income Tax Benefit (rebranded as the Canada Workers Benefit),
effective for the 2019 tax year.
* Psychiatric service dogs, effective after 2017.
* Deductibility of QPP enhanced contributions, effective for tax year 2019.
* Retroactive eligibility for Child Benefits, effective retroactively to
* New reporting requirements and penalties for trusts, effective 2021.
* Passive investment income taxation for small business, proposed to begin
In this article, Knowledge Bureau experts look at the specific tax
provisions that were announced in the budget for individuals:
Working Income Tax Benefit – Effective for tax year 2019
The Working Income Tax Benefit will be renamed as the Canada Workers
Benefit. As previously announced, the benefit will be enhanced for 2019 to
compensate for increased costs for Canada Pension Plan contributions
starting in 2019.
For 2019, the benefit will be 26% (increased from 25%) of earned income
over $3,000 (unchanged). The maximum benefit will be increased to $1,355
(from $1,042 for 2017 and $1,059 for 2018) for single taxpayers and $2,335
(from $1,892 for 2017 and $2,165 for 2018) for couples and single parents.
The clawback rate will be 12% (decreased from 15% for 2017 and 14% for
2018) for income over $12,820 (up from $11,838 for 2017) for singles and
$17,025 (up from $16,348 for 2017).
In addition, for disabled taxpayers, the new Canada Workers Benefit will be
increased to $700 (up from $521 in 2017). This benefit is reduced at a rate
of 12% when only one partner is disabled (down from 15%) and 6% when both
partners are disabled. The clawback begins at $24,111 for one disabled
taxpayer (up from $18,785 in 2017) and $36,483 when both spouses are
disabled (up from $28,975).
Provinces can change the amounts applicable to their province (as is
currently done in AB, BC, QC, and NU).
The budget also proposes to allow the Canada Revenue Agency (CRA) to
include the benefit in the assessment for taxpayers who qualify but do not
apply for the benefit by completing Schedule 6 when they file their tax
returns. To implement this and certain other tax measures, the budget
proposes to require designated educational institutions to report to the
CRA-prescribed information regarding the enrolment of students (number of
months of full- and part-time attendance). Currently this information is
provided to students on Form T2202A, but these forms are not provided
directly to the CRA.
Medical expenses: psychiatric service dogs
– Effective for expenses incurred after 2017
For 2018 and subsequent tax years, the costs incurred for an animal
specially trained to perform tasks for a patient with a severe mental
impairment in order to assist them in coping with their impairment will be
allowed as a medical expense. Expenses related to dogs not specifically
trained for this purpose will not be allowable as a medical expense.
Registered Disability Savings Plan (RDSP) qualifying plan holders –
This is an extension of an existing measure
The current rule that allows a family member to be a plan holder for a
disabled RDSP beneficiary who is not competent is being extended to the end
of 2023 (the previous rule expires at the end of 2018). A family member who
becomes a qualified plan holder before this rule expires could continue to
be a qualified plan holder after 2023.
Deductibility of QPP enhanced contributions - Effective for the 2019
To ensure that QPP contributions and CPP contributions are treated the same
way, the budget proposed to amend the Income Tax Act to allow
taxpayers who pay additional contributions on the enhanced portion of QPP
(equivalent to the enhanced CPP contributions planned for 2019) be allowed
to deduct those contributions.
Retroactive eligibility for child benefits – Effective retroactive to
The budget proposes that foreign-born status Indians legally residing in
Canada who are neither Canadian citizens nor permanent residents be
eligible for the following benefits, retroactive to their inception if they
otherwise qualify: Universal Child Care Benefit (UCCB); Canada Child
Benefit (CCB); National Child Benefit supplement.
Sharing of information – This is a continuation of existing policies
The budget proposes to amend the Income Tax Act to authorize the
sharing of information with respect to the Canada Child Benefit with
provinces for the sole purpose of administering social assistance programs.
The change is required as of July 2018, because the National Child Benefit
supplement is no longer payable after that date.
Mineral Exploration Tax Credit for flow-through shares - This is an
extension of an existing policy
The budget proposes to extend the eligibility for the mineral exploration
tax credit, which currently expires March 31, 2018, to flow-through share
agreements entered into on or before March 31, 2019. This will allow
deductions for such expenditures through to the end of 2020.
New reporting requirements for trusts - Effective for 2021 and
subsequent taxation years
Certain trusts (including some trusts that are not currently required to
file a T3 return, will be required to report the following: the identity of
all trustees, beneficiaries and settlors of the trust; the identity of each
person who has the ability to exert control over trustee decisions
regarding the appointment of income or capital of the trust
Electronic processing of T3 returns
The budget also proposes to provide funding, over a five-year period to
develop an electronic platform for processing of T3 returns.
Penalties for trust returns – Effective for 2021 and subsequent
The budget proposes the a penalty for late filing of $25 per day (minimum
$100; maximum $2,500), and an additional late filing penalty of 5% of fair
market value of trust assets (minimum $2,500) where the failure to file the
trust return was made knowingly or due to gross negligence.
originally appeared in the
Knowledge Bureau Report © 2018 by The Knowledge Bureau, Inc. Reprinted with permission. All
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Evelyn Jacks’ latest book,
NEW ESSENTIAL TAX FACTS: How to Make the Right Tax Moves and Be
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Notes and Disclaimer
©2018 by Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. No guarantee of investment performance is made or implied.
It is not intended to provide specific personalized advice including,
without limitation, investment, financial, legal, accounting or tax advice.